Online Poker Affiliates in New Jersey Get a Big Surprise

OnlinePokerReport.com has received a copy of a letter, first reported on by the site Gambling911.com, that was sent by the New Jersey Division of Gaming Enforcement to six US affiliates requesting these affiliates “immediately remove any online gaming links that are not authorized under federal law or under the law of any state” under threat of civil and criminal sanctions.

The letter was signed by New Jersey Assistant Attorney General George N. Rover and was sent to some of the most well-known affiliate websites in the industry: CardsChat.com, PokerSource.com, RakeBrain.com, Pokersites.com, RaketheRake.com, and one unnamed site.

DGE spokeswomen Kerry Langan told OPR, “We believe this may either taint legitimate sites by associating them with the illegal ones, and conversely may lend the appearance that these illegal sites are affiliated with authorized sites.”

This could be a major shakeup for online poker in the US, forcing affiliates to decide between promoting regulated or unregulated rooms – a choice between the here and now and the future.

Why I like the move

While it certainly seems to go too far in limiting what affiliates can do (according to G911, even sites with cached pages advertising unlicensed sites would be affected), I’m happy to see regulators getting involved in this part of the online poker industry – a part of the industry that has been self-policed for far too long.

I’m of the opinion that affiliates have grown too powerful in the industry, in some instances wielding their player bases like hostages against the sites.

And with this power has come corruption as some super-affiliates have engaged in under the table tactics from secret rakeback deals, to threats of costly lawsuits to smaller websites, to player poaching, to aiding and abetting players using VPN’s in ring-fenced markets.

In my mind, these tactics have decimated the poker ecology as affiliates have put high-volume players in front of attracting new players.

What has happened is that instead of actively seeking out and bringing in new players, which is the central role of the affiliate, affiliates have basically been handing off the same players to one another based on which affiliate can offer the best deal at the time. And because of this marketing efforts have gone from broad-ranging to extremely focused.

Furthermore, mid-sized and smaller online poker sites are somewhat at the mercy of these super affiliates, some of whom have threatened to take their massive stable of players to another skin unless the site in question acquiesced to some specific demand, and in some instances it seemed as if the affiliate was running things and not the online poker sites.

So what we’ve ended up with is a marketing system that benefits the affiliates and not the players or the poker sites – a marketing system that wants winning, high-volume players above all else.

Another reason I like the move

This action by the DGE could also take another chunk out of the unlicensed online poker industry in the US.

Unlicensed rooms have a simpler sign up process which does not require a player verification check, the surrendering of a Social Security Number, or geolocation.

Unlicensed rooms can accept all sorts of payment options and are under no compunctions about miscoding a credit card transaction.

Unlicensed rooms can accept players from anywhere in the world, giving them far more liquidity than licensed rooms, which are constrained to players in New Jersey.

Unlicensed rooms do not have to pay taxes which means a smaller operating cost.

Unlicensed online poker sites do not have to vet promotions or new games with regulators.

Even with all these advantages, slowly but surely these unlicensed offshore rooms are being eradicated thanks to regulations and decisions like Assistant Attorney General Rover’s on Monday against affiliates.

Now, with a crackdown on affiliates who are essentially selling weapons to both sides, we may see another step forward for regulated rooms and a step backward for unregulated rooms.

Letter sent by the NJ DGE to certain online poker affiliates

A scan of the letter sent to the affiliates mentioned above (and in the below statement) can be foundhere.

Full statement from DGE spokeswomen Kerry Langan:

The Division has written cease desist letters to 6 websites which promote illegal Internet gaming sites by advertising those sites and providing a direct link to them. Illegal sites are promoted on these websites and blogs alongside Internet gaming sites that are authorized in New Jersey.

We believe this may either taint legitimate sites by associating them with the illegal ones, and conversely may lend the appearance that these illegal sites are affiliated with authorized sites. Among the sites that the Division asked to examine their practices and to cease and desist from promoting illegal gaming sites are: CardsChat.com, PokerSource.com, RakeBrain.com, Pokersites.com, and RaketheRake.com

The Division feels very strongly about protecting NJ citizens from illegal Internet gaming websites. New Jersey has a strong regulatory framework in place to enable Internet gaming to be a safe reliable experience for those who wish to participate.

Our licensing requirements ensure that only carefully vetted companies can provide Internet gaming services. These illegal sites do not offer the same protections to players and we do not want these unregulated sites being promoted with our legal, regulated sites.

We have strict regulations in place to help prevent underage gambling as well as monitoring tools to detect possible fraud and money laundering.The Division hopes that by taking a strong stance against illegal websites and their promoters, the benefits of regulated online gaming will help drive illegal operators out of the market place and provide patrons far better protections.

At the same time, we believe it is unfair to those companies that subjected themselves to our strict licensing and regulatory requirements to have to compete with these illegal sites and the entities which are being paid to promote them.

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Steve Ruddock -
Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.